U.S. producer prices increased more than expected in September amid higher costs for energy products and food, but underlying inflation pressures at the factory gate continued to abate.
The mixed report from the Labor Department on Wednesday was published ahead of the release on Thursday of September’s consumer price index data, which is expected to show inflation moderated last month. The report is being closely watched for clues on whether the Federal Reserve will raise interest rates against the backdrop of higher U.S. Treasury yields and conflict in the Middle East.
“The Fed has not finished the job and stamped inflation out completely yet, and if anything, policymakers have their work cut out for them as much of the inflation we see in producer prices is coming from food and energy prices that monetary policy has less effect on,” said Christopher Rupkey, chief economist at FWDBONDS in New York.
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